Capital Program Management (CPM) and optimizing the Capital Program Public Works Portfolio

Art Kahn
Director of Marketing and Business Development
CIPPlanner Corporation
Mountain View, California

The state of infrastructure across the United States has become a critical factor relative to its well-being. This is a rather broad-brush statement but, if one considers the changes that have taken place in this country over the last ten years, one can see drastic shifts in economic and socio/political demographics which have redefined its infrastructure needs. Add to this the impact of technology adoption on a global level, and it becomes quite clear that the ability to manage our nation's infrastructure lifecycle must be considered a key element and competency for this nation to maintain its global leadership position.

An assessment of the nation's infrastructure conducted by the American Society of Civil Engineers (ASCE) resulted in ASCE's 2005 Report Card for America's Infrastructure. The report card assessing the same 12 infrastructure categories as done previously in 2001 (augmented by three new categories) showed that there had been little if any improvement since receiving an overall grade of D+ in 2001 with some areas slipping toward failing grades. Figure 1 displays the findings of this assessment as represented in the ASCE report card. Details and definitions of the categories can be found at http://www.asce.org/reportcard/2005/index.cfm.

These concerns are manifested at the federal, state and local levels, but with the most far-reaching implications stemming from the needs of the local sector. The federal and state levels have more overarching and supporting functions and responsibilities, while the local level is more responsible for defining and driving the nation's infrastructure needs (current and future). In view of these concerns, the primary challenge faced by the local sector—specifically the towns, cities, municipalities, counties, etc.—is keeping up with the ever-evolving needs, the breadth of those needs, and doing so in an environment in which funding and time are not commodities whose availability is unlimited. As such, everything can't be done.

If we draw a corollary to the business sector, the public sector faces similar challenges to that of a company in architecting its Strategic Plan with certain exceptions such as multi-year planning with multiple public funding sources. However, deciding which new products it is going to introduce into the market and recognizing that it has limited capital with which to design, build and deliver these products while maintaining control over their existing products in the marketplace are all things that can be correlated to the public sector's need to identify, evaluate, select and manage various projects within their Capital Improvement Programs (CIPs). The company, in formulating its Strategic Plan, must decide the appropriate mix of new products/projects to be introduced to realize the greatest value (fiscal and strategic) for the company; or, in other words, the company needs to "Manage the Portfolio." But it can't do so without considering that its existing product offerings such as funds and time are not unlimited.

Resources are also limited in their availability and all of these elements are subject to being impacted by external forces. The public sector like its business counterpart must be able to "Manage the Portfolio" in order to optimize the value to be brought to its constituency, but it must be able to do so across the entire portfolio including existing CIPs already underway as well as those being introduced.

How is this done? What is required to enable and ensure that a municipality can "Manage the Portfolio"? The first step is to identify the needs for capital investment that best support the long-term goals of your jurisdiction. As potential projects are identified what is left to be accomplished is to decide or prioritize which of these projects will find their way into the Capital Plan. The decision to include, exclude, or defer a project being put into the Capital Plan will be determined based upon evaluations and assessments made during the planning process. The criteria for making these determinations may include fiscal, public safety, timing, resources, and environmental factors among others. What is needed is the ability to assess these projects on three tiers: first the lowest tier, as standalone projects with respect to the value they bring to the municipality; second, a comparative analysis with respect to other new projects being introduced as candidates for the plan; and third at the highest tier, in a comparative analysis with respect to preexisting plans and projects already underway and the impact that the new plan may have on those preexisting plans.

Managing the Portfolio can't be done by managing projects and plans in a vacuum. But this isn't the real challenge. The real challenge is being able to acquire, coordinate and consolidate data from disparate or distributed sources and subsequently analyze that data in order to formulate or determine the optimal CIP Portfolio possible. It requires being able to gather and synthesize both quantitative and qualitative data. Financial, project, schedule, resource, engineering, environmental and public safety data all must be acquired, coordinated, consolidated and ultimately analyzed to achieve the final objective...the Optimal CIP Plan! Currently, the majority of local level government entities utilize IT tools which are standalone disparate tools incapable of acquiring and integrating the necessary data into a single management tool. The consequences of this are numerous.

  • It is considerably time consuming to gather and enter the data into a bundle of disconnected systems.
  • There is a high probability of redundant effort.
  • There is a high probability of data being entered erroneously.
  • There is a high probability that there will be critical data or information missing.
  • There is a low probability that a comprehensive evaluation across the entire portfolio can be accomplished.
  • There is a very high probability that the CIP Portfolio and Plan will not be the optimal plan for that municipality.
  • As a result there is a very high probability that the CIP Portfolio and Plan of subsequent budget cycles will be less than optimal since the optimal portfolio and plan must consider that which is already in place.

The solution: Enable the integration, analysis and management of the CIP data and information and subsequent generation of the CIP Plan. The results:

  • Optimization of the CIP Plan
  • Optimization of the CIP Plan Portfolio
  • Improved Budget and Project Management Decisions
  • Reduced Budget Process Cycle Time
  • Greater Flexibility and Responsiveness to Changing Conditions
  • Reduced Risk Associated with the Success of the CIP Programs

Art Kahn is Director of Marketing and Business Development for CIPPlanner Corporation, which has been providing innovative and reliable software solutions to the public sector including major government agencies and organizations since 1998, with a specific focus on Capital Improvement and Maintenance Programs beginning in 2000. Art Kahn has more than 25 years of experience in the Enterprise Application Software domain, with an emphasis on the delivery of technology solutions with respect to Corporate Re-engineering and Process Management functions for the public sector. He can be reached at (650) 605-0801 or artkahn@cipplanner.com.